Case Analysis

Forta Furniture:
International Expansion

Submitted by:
Shalini Miharia - 191151
Shashwat Shrivastava - 191248
Khushi Gupta - 191326
Mansi Chhabra - 191330
Piyush Agarwal - 191341
Yash Khandelwal - 191364
Flow of presentation
01 About the Company

02 Problem statement

03 SWOT Analysis

04 PESTLE Analysis

05 Financial Analysis

Conclusion &
06 Recommendations
ABOUT THE COMPANY : FORTA FURNITURE

❏ Started by Alfred Mirea in 1992 in Romania.

❏ The company’s product was regarded as well manufactured and durable which
offered plain and traditional designs.
❏ It targeted middle class individuals over the age of 50 or younger middle class
families with kids.
❏ In 2012, Vasile Mirea was appointed as Forta’s new CEO.
❏ In 2013, the company acquired Abilit the fifth-largest wooden furniture brand
in Romania to reach younger customers.
ROMANIAN FURNITURE MARKET

❏ Romania was the second largest manufacturer of furniture in eastern Europe,

with over $1.2 billion in retail revenue in 2014.
❏ There were around 800 furniture manufacturers, ranging from large
conglomerates to foreign subsidiaries to local businesses, competed in this
market.
❏ Due to increasing competition Forta’s market share declined from 18% in
2003 to 12% in 2014.
❏ IKEA which entered the Romanian market in 2007 had acquired 8% market
share by 2014.
Channels of distribution
❏ Forta had sold mainly through multi-brand retailers(89%) while
Abilit was using single brand distribution (64%)
❏ E commerce accounted 1% category sales but has huge potential.

Consumers
❏ Romanian customers were price sensitive. After this they gave
importance to the durability and high quality.
❏ Romanian customers are loyal and retainment is 75%
❏ Younger romanian customers preferred aesthetics over durability and ore
likely to buy from international brands
Report

Particulars Poland Bulgaria

Consumer Insights ● Higher per capita
income $14340
● Durability and
aesthetics are important
to them
● Lower per capita
income $7853
● Focuses on durability
and prefers well
established brand

Distribution channel Prefers retail and multi brand Prefer buying from single
stores brand store

Forta’s presence No presence Has presence

Problem Statement
The CMO of Forta has to advice whether the company should go for expansion in
the international market. If yes, then what strategy should the company should
adopt as in :

❏ Which country to enter first?

❏ Which brand is suited for the expansion?
❏ Which entry mode should it adopt?
 SWOT Analysis

STRENGTHS WEAKNESS
● Established name in the ● No concrete Price Strategy
romaian market ● Negative perception about
● Member of the EU the romanian furniture
● Big Market share in the ● No international presence
Romania ● Additional cost to build new
● supply chain.
Long Business Experience
 SWOT Analysis
OPPORTUNITIES
● Can venture into private
label
● Joint ventures with the local
brand in unknown territory
● Can venture into e-
commerce
● Focus on pricing strategy
THREATS
● IKEA’s growing popularity
● Decreasing brand loyalty
● Market saturation is
increasing
● Consumer not willing to pay
enough to make entry
profitable
PESTLE Analysis
Political:

❏ Local Government Regulatory- They were already selling in Bulgaria,

however they had to clear the local government norms in Poland.

Economic:

❏ Disposable Income- Consumers of Poland (PCI $14340) were wealthier as

compared to Bulgaria (PCI $7853)

Social:

❏ Demographic Behaviour: In Bulgaria, consumers are preferring functionality &

durability, whereas in Poland both durability and aesthetics are given
importance.
PESTLE Analysis

Technological:

● Distribution: Offline: Online in Bulgaria is 80:1, whereas in Poland is 80:9. They

look at style and trend to buy the best furniture by visiting stores of different brands.

Legal:

● Consumer Protection Laws – Forta Expansion needs to know what are the
consumer laws, what is the rate of enforcement, what is the attitude of authorities
towards consumer protection laws, and what is the role activist groups in
enforcement of consumer protection laws.
Profitability Analysis
Conclusion & Recommendations

● Private-Level Entry strategy with the brand Abilit for Poland

● Branded Entry strategy to enter Bulgaria market with the brand Forta